Service Business Strategy

Strategies followed by successful service companies demonstrate that there may be a cyclical nature to business focus, emphasised during periods of growth and recession. Service is now firmly recognised as a mechanism that can and will deliver growth, and has proven to be a resilient revenue creator and margin builder. That does not mean product development or technological development will give way to service, quite the contrary; closer alignment means that they become integral. Cloud computing is an example – highly reliant on technology development, but fundamentally demonstrating value to the business through provision of a service offering.

Research carried out with a number of the best performing companies; found that the majority of senior managers were visiting up to a hundred customers a year, believing that there is a high correlation between relationship-building and customer satisfaction and customer loyalty, if supported by good service.  The same research also highlighted that the senior manager could occasionally be seen as a soft-touch by the customer if they gave away hard-won margin on a contract, which underlines the absolute necessity to treat customer centricity professionally and not believe a few positive customer-focused actions will win hearts and minds.

The service operation has to be heard and understood in the Boardroom, if it is to achieve its primary role of business development (revenue and profit growth) through feedback from the customer to the business. This close alliance with the customer is often referred to as customer intimacy and recognises the role of the customers in helping the supplier to continually improve product quality performance, and increase the relevance and usability of the products to themselves and the customers. The best way of achieving customer intimacy is to gain recognition from the Board that the service operation is not simply a provider of good service and satisfied customers but will generate and contribute to the profit of the business.

Some Service Directors may feel usurped by a board that spends time to debate and question decisions that once would have hardly merited a line in the board room minutes, but the service operation and service director are legitimate board room attendees and the issue is not one of being usurped, but rather of being asked to join the party and to help integrate service and the business to make a larger and more profitable operation.

Research carried out with a number of the best performing companies; found that the majority of senior managers were visiting up to a hundred customers a year, believing that there is a high correlation between relationship-building and customer satisfaction and customer loyalty, if supported by good service.  The same research also highlighted that the senior manager could occasionally be seen as a soft-touch by the customer if the-y gave away hard-won margin on a contract, which underlines the absolute necessity to treat customer centricity professionally and not believe a few positive customer-focused actions will win hearts and minds.

 The customer interface is no longer able to be simply defined as “all customer facing activities across the business” instead it is best represented by figure 1 which highlights the reality of business relationships: the customer should be able to, and could speak to anyone they believe will help with their problem. 

Service economics is an umbrella phrase, coined by the authors, to convert the wide-ranging intangible aspects of service (including but not limited to processes, people, customers, strategy, brand values, competencies) into something tangible (financial information) that can be applied by the broader business community. The target is to capitalise on the value that the service business represents to the customer and stakeholder when dealing with the growing complexity of demands and expectations of customers and suppliers, to achieve an effective and profitable partnership of supplier and customer.

Click for full article

This article is accessible for registered visitors only. 
You can register here
Registered users can tell Noventum about which subjects they would like to receive email. 
Without previous permission data will not be used by others.

Companies endeavouring to make their operations as efficient as possible in order to provide customers with top quality service have found it beneficial to invest time and energy measuring customer satisfaction. What even enlightened companies seem to find difficult is to consider the activities as an integrated whole and to ensure that the customer values what is provided. This article will discuss the importance of integrating the customer into the operation and commends the desire to understand customer service experiences, and how to cost effectively provide exactly what the customer really wants through intimate process cost knowledge.

The latest research from Noventum consultants appears to have got to the heart of what drives success in the service industry today and what is required to continue driving it into the future. The success comes from constructing a successful strategy and delivering it into an effective operation. Creating loyal, satisfied customers, while strongly growing revenue and profit.

The research outlined in Figure 1 has shown as is normally the case that some of the strategies are proving to more successful than others. The two most successful have focused directly onto the customer interface, staff and customers.

One important driver of performance improvement in the service business is the degree in which service business are able to standardise their service delivery organisation. In our 2008 research named “The future of Service Management” (www.thefutureofservice.com) we saw that companies that were able to demonstrate both strong revenue growth and year on year improvements in profit margins were able to deliver high value added services through standardised processes. The less profitable service businesses typically see the complexity of their operations increase exponentially when growth takes of. The intangible nature of the service business with a strong dependency on the performance of individuals makes it one of the most challenging types of businesss to manage.